Summary: The DPIIT has revised the Standard Operating Procedure governing the processing of FDI proposals requiring government approval, to align it with the recent changes introduced under Press Note 2 of 2026 and the NDI Amendment Rules, 2026. While the overall approval framework remains largely unchanged, the revised SOP introduces significant procedural changes, including a dedicated framework for investments from countries sharing land borders with India, enhanced disclosure and reporting requirements, revised timelines and other measures aimed at streamlining the FDI approval process.
Introduction
The Department for Promotion of Industry and Internal Trade (“DPIIT”) issued a revised Standard Operating Procedure on May 4, 2026[i] (“2026 SOP”), for processing foreign direct investment (“FDI”) proposals requiring government approval. The 2026 SOP supersedes the earlier Standard Operating Procedure dated August 17, 2023 (“2023 SOP”), and was introduced following the issuance of Press Note 2 of 2026 (“Press Note 2”) and the Foreign Exchange Management (Non-debt Instruments) (Amendment) Rules, 2026[ii] (“NDI Amendment Rules 2026”).
While the overall approval regime remains broadly unchanged, the 2026 SOP introduces procedural modifications aimed at streamlining approvals, formalising reporting obligations, and aligning the SOP with the revised framework governing investments from countries sharing land borders with India (“LBCs”).
Key changes under the 2026 SOP
New framework for LBC investments
The most significant change under the 2026 SOP is the introduction of a dedicated section dealing specifically with investments from LBCs.
The 2023 SOP did not contain a separate framework for such investments and operated within the broader regime of Press Note 3 of 2020 (“Press Note 3”), which left room for doubts. The 2026 SOP has been updated to align with the approval process outlined in Press Note 2 and the NDI Amendment Rules 2026. It introduces a reporting framework for certain LBC investments that do not require prior government approval, and procedural guidelines for LBC investments in specified sectors and activities that do require such approval.
Reporting regime
The 2026 SOP establishes a reporting mechanism for certain investments involving investor entities with direct or indirect ownership by LBCs. If the cumulative ownership by LBCs remains below the 10% beneficial ownership threshold, prior government approval is not required. In such cases, the Indian investee entity or resident transferor/ transferee is required to submit the prescribed information in the format[iii] through the Foreign Investment Facilitation (“FIF”)/ National Single Window System (“NSWS”) portal to DPIIT, prior to the inward remittance of foreign capital or, where no remittance is involved, prior to execution of relevant transactions, including issuance/ transfer of capital instruments, as the case may be. Further, such reporting obligations are in addition to existing reporting requirements under the Foreign Exchange Management Act, 1999[iv], and other applicable laws. This additional reporting may result in authorised dealer banks modifying their information requests to include copies of such reporting prior to the actual remittance taking place, wherever relevant.
Fast-track approval
Further, the 2026 SOP also introduces an expedited 60-day approval mechanism for specified LBC investments[v]. Unlike the 2023 SOP, which did not prescribe a dedicated timeline for disposal of such FDI proposals, the introduction of a defined timeline seeks to provide greater certainty and predictability to foreign investors. This is a significant change, given the historically prolonged timelines for processing such applications, which have, in certain cases, extended to several years.
Expanded disclosures
In addition to the above, the 2026 SOP considerably expands the scope of codified disclosure requirements relating to beneficial ownership for LBC-linked investments. In addition to existing beneficial ownership disclosures required under the 2023 SOP, the 2026 SOP now specifically requires disclosure of, inter alia, control rights, board appointment rights, veto rights, and any rights conferring direct, indirect, or ultimate effective control. These would earlier form a part of additional information requests made by the relevant Ministry reviewing the applications but now form a part of the standard set of information/ documents to be provided.
Further, the declaration relating to LBC investments has been reformulated. Under the 2023 SOP, applicants broadly confirmed that no investor or beneficial owner was situated in or was a citizen of an LBC. The 2026 SOP instead requires a declaration that the proposed investment or transaction does not require prior government approval under Para 3.1.1(a)[vi] or Para 3.1.1(b)[vii] of the Consolidated FDI Policy, 2020 (“FDI Policy”).
Changes to document requirements
The 2026 SOP has also broadened the document checklist. For instance, while the 2023 SOP only required disclosure of prior government/ Foreign Investment Promotion Board/ Secretariat for Industrial Assistance/ Reserve Bank of India (“RBI”) approvals, the 2026 SOP additionally requires disclosure of prior rejections, closures, and withdrawals of applications, if any.
Further, the undertaking relating to sanctions and caution lists has been revised to expressly include ‘Significant Beneficial Owners’ under its ambit.
MEA role and centralisation of process
The role of the Ministry of External Affairs (“MEA”) has also been enhanced under the 2026 SOP. Under the 2023 SOP, proposals were forwarded to the MEA “for information”, and MEA could provide comments “wherever necessary”. Under the 2026 SOP, MEA is now specifically required to provide comments/ clearance for proposals involving investments from LBCs, and in other cases “wherever necessary”.
Further, comments/ clearances from the Ministry of Home Affairs (“MHA”), MEA, and the RBI are now required to be uploaded directly on the FIF/ NSWS portal, thereby increasing transparency and centralisation of the approval process. This is also aimed at reducing the timelines when an application involves review by multiple regulators.
Closure of incomplete applications
The 2026 SOP introduces a more detailed and time-bound closure mechanism for incomplete applications. Under the 2023 SOP, applications could be closed after issuance of a final reminder in cases of non-submission of documents or information. Under the 2026 SOP:
- Applications are reviewed within one week of receipt;
- If the applicant does not respond, a reminder is sent, allowing an additional seven days;
- If there is still no response, a final reminder grants another seven days before the application can be closed.
Other changes
While the 2023 SOP had already introduced a paperless FDI application filing process, the 2026 SOP further streamlines it by consolidating references to the FIF and NSWS Portals into a unified “FIF/ NSWS Portal”, thereby removing the distinction between the filing and examination platforms. Further, under the 2026 SOP, there is no requirement to obtain the Secretary’s prior approval before seeking policy clarifications from the DPIIT or consulting other ministries/ departments. It also dispenses with the earlier inter-ministerial committee mechanism for handling delayed or escalated proposals for quicker disposal, as provided under the 2023 SOP.
Conclusion
The 2026 SOP represents an important procedural update to India’s FDI approval framework. While the overall approval framework, the role of administrative ministries/ departments, procedures for withdrawal of pending proposals, surrender of approval letters, rejection of proposals and imposition of additional conditions for approval, remains largely unchanged, the 2026 SOP introduces greater procedural clarity, enhanced disclosure obligations, and a significantly expanded framework for LBC-linked investments. This reflects an attempt to balance ease of doing business with continued regulatory oversight over investments involving national security considerations. Going forward, the implementation of the revised framework will be particularly relevant for investors operating through complex global ownership and fund structures.
[i] Standard Operating Procedure for Processing Foreign Direct Investment Proposals dated May 04, 2026 (“2026 SOP”) (Available at: SOP dated May 04, 2026)
[ii] Foreign Exchange Management (Non-debt Instruments) (Amendment) Rules, 2026
[iii] Schedule I, 2026 SOP
[iv] Foreign Exchange Management Act, 1999
[v] Paragraph 7 of Annexure VII, 2026 SOP
[vi] Para 3.1.1(a) of Consolidated FDI Policy, 2020 (“FDI Policy”)
[vii] Para 3.1.1(b) of FDI Policy